* FTSE 100 touches 21-mth high
* Commods firm as oil, metal prices rise
* Banks higher helped by Fed rate comments
By Jon Hopkins
LONDON, 17 March (Reuters) - Britain's top share index
gained 0.4 percent around midday on Wednesday, lifted by
strength in commodity issues and banks as investors welcomed the
Federal Reserve's pledge to hold interest rates near zero.
By 1153 GMT, the FTSE 100 <> index was up 22.21 points
at 5,642.64, just off an intraday 21-month peak of 5,657.70,
after the U.S. central bank held benchmark rates near zero and
maintained its pledge to keep them low for an extended period.
"Yesterday's news from the Fed has bolstered the move of
cash back into risk assets, mainly banks and commodity issues,
despite the strong recent rally," said Mic Mills, senior trader
at ETX Capital.
"But although a new multi-month peak has been hit by the
FTSE, investors remain wary of what could be around the corner,
particularly given the looming UK election," Mills added.
Commodity stocks added the most points to the FTSE 100 index
as metal prices firmed and crude prices <CLc1> pushed past $82 a
barrel helped by a softer dollar following the Fed comments.
Miners were the top blue-chip gainers, with Fresnillo
<FRES.L>, Kazakhmys <KAZ.L>, Xstrata <XTA.L>, Vedanta Resources
<VED.L>, and Lonmin <LMI.L> up 1.6 to 2.7 percent.
Rio Tinto added 2.5 percent. China's top state-owned
nonferrous metals company Chinalco confirmed it is in talks with
Rio Tinto about potential joint ventures in Mongolia and Guinea,
a Chinese newspaper said on Wednesday. []
Oil majors also saw good gains, with BP <BP.L>, BG Group
<BG.L>, Royal Dutch Shell <RDSa.L>, Tullow Oil <TLW.L>, and
Cairn Energy <CNE.L> adding 0.2 to 1.5 percent.
Banks were in demand helped by the Fed's pledge and by
Tuesday's reassuring news on Greece's debt problems, which saw
EU finance ministers pledge support if needed and agency S&P
affirm its debt rating on the country.
Lloyds Banking Group <LLOY.L>, Royal Bank of Scotland
<RBS.L>, Barclays <BARC.L> and Standard Chartered <STAN.L>
gained 0.4 to 1.6 percent, while HSBC <HSBA.L>, which traded
ex-dividend on Wednesday, added 0.4 percent.
KINGFISHER SOARS
Among individual movers, DIY retailer Kingfisher <KGF.L>
added 2.8 percent as HSBC raised its rating to "overweight",
citing improved visibility on long-term cash flow.
Elsewhere on the high street, however, Marks & Spencer
<MKS.L> fell 1.3 percent as JP Morgan cut its rating to
"underweight" from "neutral", noting forecast risks and
strategic questions.
Drugs firm Shire <SHP.L> was also blighted by a broker
downgrade, off 1.6 percent as Citigroup cut its stance to "sell"
from "buy" on valuation grounds.
Elsewhere, hedge fund manager Man Group fell 3.1 percent as
Numis cut its rating to "add" from "buy" and Morgan Stanley
reduced its target price for the firm to 260 pence from 340
pence.
Security services group G4S <GFS.L> was the biggest FTSE 100
faller, down 4.5 percent after falls on Tuesday following
in-line results, with traders noting talk that top shareholder
Skagen Trust was selling 141 million shares, or around 10
percent of the firm. []
Ex-dividend factors took 6.14 points off the FTSE 100 index
with Inmarsat <ISA.L>, Standard Life <SL.L>, Thomas Cook Group
<TCG.L> and WPP Group <WPP.L> also losing their dividend rights.
On the second line, transport issues got a boost after
Arriva <ARI.L> confirmed it had recieved an unsolicited bid
approach after takeover rumours on Tuesday.
Newspaper reports on Wednesday suggested German state-owned
rail operator Deutsche Bahn was the likely predator.
Arriva was the top FTSE 250 <> riser, up 18.9 percent,
while peers FirstGroup <FGP.L>, National Express <NEX.L>, and
Stagecoach <SGC.L> took on 3.5 to 4.2 percent.
Equities showed little reaction but sterling rose, nearing a
3-month high versus the dollar after UK employment data came in
better than expected. []
Also boosting the pound were Bank of England minutes showing
policymakers voted unanimously to to keep monetary policy
unchanged this month, with some pointing to an increase in
upside inflation risks. []
(Editing by Simon Jessop)
